2022 (6) TMI 352 - DSC - GST

Seeking grant of anticipatory bail - passing huge amount of inadmissible Input Tax Credit (ITC) in fraudulent manner by the way of issuing bogus invoices without supply of any goods - availment of ITC on the basis of purchase invoices without receipt of goods - offence u/s 132(5) of the Central Goods and Services Tax Act, 2017 - HELD THAT - Matter is at the investigation stage. Apparently, as per say of the respondent, officer of respondent visited the office of suppliers of the firm of the applicant. However, those suppliers are not in existence. This apparently shows that the applicant illegally availed ITC. Applicant may tamper with the evidence and interfere in the investigation. So far as another ground raised by the learned advocate for the applicant on the point that if the ITC availed by the applicant is calculated year wise, then offence is bailable as it falls within the category of Rs.500 lakhs, is concerned, if this submission is accepted at it is, then application is not maintainable if the offence is bailable. It is clear that calculation of the tax under Chapter XII is distinct from the Chapter XIX, which relates to offence and penalties. Therefore, there is no substance in the argument advanced by the learned advocate for the applicant. Considering the nature of offence involvement of the applicant, this is not a fit case to grant anticipatory bail to the applicant. Bail application dismissed.

Summary

Issues:
Grant of anticipatory bail under Section 438 of Cr.P.C. in connection with CGST Act, 2017 for passing inadmissible Input Tax Credit (ITC) through fraudulent means.

Analysis:
1. The respondent alleged that the applicant, as the owner of a firm, was involved in passing inadmissible ITC fraudulently by issuing bogus invoices without actual supply of goods. The firm's premises were found to have no goods and were only used as an office. The respondent also discovered non-existent suppliers of the firm, leading to availing of over Rs.5.24 Crores of ITC. The applicant failed to produce necessary documents and approached for anticipatory bail.

2. The applicant argued that he had not committed any offense and was willing to cooperate with the investigation. He claimed to have bills of suppliers, challenging the respondent to trace them through proper registration. The applicant contended that the alleged tax default, if calculated year-wise, would be below Rs.5 Crores, making it a bailable offense, thus seeking protection.

3. The respondent opposed the application, stating that the investigation was ongoing, suspecting the applicant might have illegally availed ITC benefits of over Rs.25 to 30 Crores. The non-existence of the firm's suppliers indicated a false creation for illegal ITC. The respondent argued against connecting tax assessment under Chapter XII with offenses under Chapter XIX of CGST Act, citing a relevant High Court judgment.

4. The court observed that the matter was at the investigation stage and noted the non-existence of the firm's suppliers, indicating potential illegal ITC availing. Concerns about tampering with evidence and interference in the investigation were raised. The court rejected the argument that the offense was bailable based on year-wise calculation, emphasizing the distinction between tax calculation and offense under different chapters of the CGST Act.

5. Ultimately, the court concluded that due to the nature of the offense and the applicant's involvement, it was not a fit case for granting anticipatory bail. The application for anticipatory bail was rejected, and the matter was disposed of accordingly.